Don’t Hold Too Long
"Don't Hold Too Long" is another expression for "Don't Get Greedy" and "Don't Be a Sheep"
This article is an update of my OTC insights because many of the same principles apply.
Like OTC stocks, Alt Coins are meant to be traded, not held. Bitcoin is the legacy coin, most of the altcoins (think 95% of them) follow the lead of bitcoin. They are susceptible to random rumors, pump and dump or varying price fluctuations. There is a reason most have been labeled “8hitcoins.” This is only to say, learn the fundamentals of trading and you can make money on your favorite coin.
One of the best mentalities you can adopt is that of a day trader or scalp trader. “Get in, Get Out.” Day traders are just that – they begin and end the day with no position. Scalp traders jump on big moves and “play between the 20’s” (To use an American Football term). Sure, you may be holding a position for a week or two, but you want to be looking for the exit as soon as you enter.
Don’t Get Greedy!
An ideal gain for a scalp trade is somewhere in the 25-40% range. If a 100% gain appears for you; take it and RUN! Now, if this is the norm for you, to get 100% gains on the regular, then just ignore the rest of this article. I sincerely doubt that is the norm, however. Trying to squeeze out another 12%, 20% or whatever magic number you have in mind is only doing you a disservice.
The same rules apply to this style as any style of trading; risk management, position size, optimal entries, taking profit, etc. The caveat is, YOU MUST FOLLOW THEM AT ALL TIMES. If you get lax for any reason, prepare to take a bath. Alt coins are subject to a lot of rumors. Many times you won’t know where they originate or why. The advantage you have is being able to read the price action on the chart and spotting areas of support & resistance. Your edge and your mantra must be, “I’ll take what is given and no more.” Be aggressive taking your profits.
Don’t Be a Sheep!
A voice in the crypto space tells you to HODL – it’s only a matter of time ‘to moon.’ That’s great… who are they, why should you trust them and what does “moon” mean as far as price to you? That’s not a price target and PT’s are just a projection anyway. Do your own research! Be greedy, but be conservative and cautious. Sometimes it is ok to hold (as long as your setup stays intact), but if you are holding longer than 10 sessions, you are venturing into a different style and need different criteria for your approach.
News or guidance have to be fundamentally influential to a coin for it to matter.
Let’s use Ethereum Classic as an example and the rumors & news leading up to the CoinBase Listing. Have you heard the old cliché “Buy the Rumor, Sell the News?” Live by this!
Price began to steadily climb as we approached the ETC listing on Coinbase. Everyone was growing with anticipation. Price wicked all the way up to the low 20’s. It sold off sharply and hasn’t reached that level again since. Take the gains, don’t get caught holding the bag.
Let’s also look at the Bitcoin Cash hard fork rumors. This is much more rapid and we saw a sell off even before the November 15th deadline.
I want to clarify some things before concluding. If you have a coin that you fundamentally believe in, then hold it. I’m assuming you have done your research and have a reason to keep it in your investment portfolio. This article is to talk about being a trader. That means buying the lows and selling the highs of the price action. Alt coins can be very volatile. Locking in your gains is a great feeling. Conversely, sitting on a losing hand, frankly sucks. Remember, there is always a pull back. Whether you missed the entry or want to buy back in, there will be another opportunity.
You can have a favorite alt coin, but perhaps it is best to learn how the price of it moves and trade it continuously when it is in your favor. Don’t fall victim to holding the bag. Get in, get out.
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